Council Opts against Polling – Lays Out Parameters for Revenue Measures

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While city staff had pushed for the council to commission a poll to study voter inclinations, council opted against that approach and instead asked for the staff to return with three separate revenue measures – it would appear all parcel taxes would ask for $125 for a parks measure, $125 for a roads measure and $50 for a social services measure.

“Services that we provide today and responsibilities that we have today that we haven’t been providing for – for instance road maintenance and repairs,” Mayor Pro Tem Brett Lee explained. “I think that informs what the amount of the ask should be. I personally don’t think that we need a poll.”

Councilmember Rochelle Swanson said that she learned from the mistakes of the 2012 Parks Tax that “we need to ask for what we need after we do an assessment.” In hindsight, she believes that the parks tax would have passed at a higher rate that would have allowed the city to collect a greater portion of its parks needs versus the tax.

Therefore, she said, “we need to ask for what we need and then allow voters to make that decision.” She agreed with a commentor that “mixing taxes leads to confusion.” So she believes that parks need to be separate from roads which need to be separate from social services – “so people can make a conscious choice about what they want to support.”

That may mean they vote for one or two but not three of them, however, she fears, “human nature says if there’s confusion, it’s going to be a no. That’s the default vote. We need to be forthright
about what we’re asking for and let our community make those decisions.”

She concluded, “We likely wouldn’t need a poll.” She said a poll means “we’d be looking for what’s that magic number that’s going to make something happen.”

Councilmember Will Arnold said that the horse race value of a poll is fairly limited. “There is not a lot of good information that we’re going to glean from it,” he explained. “We know that that’s what we need to do.

“I’m trying to get at what we would glean from a poll that would really be useful,” he continued.

“I don’t see the benefit to spending money on a poll.” He warned, “It may hamstring us as to what we’re going to do.”

Councilmember Arnold believes that we need an aggressive economic development plan and to take an “all hands on deck approach.” He said, “This is one of the hands we need.”

His suggestion for the tax measure was $99 for parks and $99 for potholes. As he explained later, he preferred that to $125 as he believed it would be easier to sell to the voters.

The exception about the polling was Councilmember Lucas Frerichs. He said, “I certainly do think there’s some wisdom in proceeding with a poll.” He said he didn’t think it needed to be a $25,000 poll. “I think there’s the ability to do it for less than that and have it be just as quality,” he said. “I do think there’s a fair amount of value that could be provided from it.”

He noted that Measure D, the Parks Renewal Tax that passed in 2012, passed with 84 percent. He said that the next day after it passed, the city manager laid off a bunch of tree trimmers. “That was not a great signal to show,” he said. “I think that there was a real missed opportunity in 2012 with regard to not raising the parcel tax from $49 to a higher rate at that point, to actually more fully fund the parks department.”

Councilmember Frerichs was agreeable to a separation of taxes. “Let’s not confuse people with regards to what the parcel tax is. I think we should just do a renewal of the parks parcel tax – (but) I think we should increase it. I’m amenable to seeing what that amount should be. It should minimally be doubled.”

He noted that even doubling it would only cover one-third of the total parks costs.

Councilmember Frerichs said, “I’m not in favor of going in the direction of utility tax.” That prompted both Rochelle Swanson and Will Arnold to join in that they are not in favor of the Utility Users Tax (UUT) either, which effectively took that option off the table.

“I think we’ve actually moved the ball here today,” Robb Davis said.

“I really appreciate the conversation on polling – I agree with it,” he explained. He noted that he was really disappointed with the last poll and said, “I just was not convinced of the value of it.”

He said, “What I do think we should do is some really clear communication to our community on a number of points.” He said across the city every homeowner is paying property tax based on the value of their property. However, what we actually keep here in the city of that tax revenue “varies quite a bit… When you pay your property tax a relatively small amount of it stays here to fund the things that are closest to home.

“When we’re asking you for a parcel tax, the cool thing about that is 100 percent of it stays home,” he said. “We need people to see the value added of a relatively small parcel tax.

“These (taxes) that we vote on, we don’t have to share with other (communities) – they stay here,” he said.

“We really do need to use the information that we now have, as imperfect as it may be, to say this is our estimate of need,” he explained. He said as a back of the envelope, “we’re probably short about $8 million on infrastructure.” That is street and park maintenance that is not being covered today.

He then added to that and said they hope to get $1 million from TOT (Transient Occupancy Tax) and $1.5 million from the state funding for road maintenance. We assume that the sales tax will be renewed. We don’t know what will come in on cannabis.

“At the current time, we’re probably looking at a $4.5 million deficit, maybe a little bit less, maybe more,” the mayor said. “It could be significantly more and it will be significantly more because of pensions.”

He said that pensions are going to go perhaps as much as $7 to $10 million higher. “Can we cut our way out of that?” he asked. “We can if we downsize.” He said, “I am not optimistic that we are going to be able to fill that gap. I am optimistic that we can continue to hold the line on salary increases and the Leland model does assume COLAs of two percent per year.”

He said, “The gap is going to increase whether we add staff or not and it’s going increase significantly.”

He warned that the city is still overly dependent on tax revenue from autos and RVs and that should give us pause about the ability to maintain that source of revenue.

To sum it up, the council was not interested in a poll, the view of Councilmember Frerichs notwithstanding. The move here was away from a UUT and toward a parcel tax, special tax, with a separate measure to address specific and distinct needs.

He was looking for $125 on parks and $125 for roads where he projects each will yield $3.5 million. He wants them for ten years with built-in inflators.

He supports a $50 tax for social services which puts the tax ask at $300 per year.

Will Arnold pointed out that if Robb Davis puts his talents behind the $50, it passes easily.

Staff will come back with more formal proposals in the coming weeks and months.

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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

Having just received my property tax bill, these numbers are a little jarring. I am not opposed per se to the tax, but I agree that more information/education is needed. For example, I know that the roads are in bad shape, but what does the $125 for parks fund? Is that what is needed to maintain the parks at their current level or would it involve other types of repairs that have been put off? I haven’t been following the issue with the parks.

Basically they passed a parks tax in 2012 that was like a quarter of the ongoing funding and supplemented it with General Fund money. However, there is deferred maintenance that has been put off as well.

I believe they had that discussion from June, but also Elaine Roberts Musser pointed out there is a 23 percent water rate hike coming in part due to the drought and they were concerned about the impact of a tax on top of the rate hike.

So often with conversations about new taxes, it feels like are talking about nothing more than a pinkie finger sized temporary band-aid in context of our near term projections for higher infrastructure and pension obligations.

If I am reading comments of the Mayor correctly, we are looking at predictable, near term annual spending increases in the range of $15-18MM per year:

“we’re probably short about $8 million on infrastructure.” ……….He said that pensions are going to go perhaps as much as $7 to $10 million higher. “Can we cut our way out of that,” he said. “We can if we downsize.” He said, “I am not optimistic that we are going to be able to fill that gap. I am optimistic that we can continue to hold the line on salary increases and the Leland model does assume COLAs of two percent per year.”
He said, “The gap is going to increase whether we add staff or not and it’s going increase significantly.”
He warned that the city is still overly dependent on tax revenue from autos and RVS and that should give us pause about the ability to maintain that source of revenue.

If this is the case, and I have no reason to believe otherwise, why have we not appointed a new committee – or engaged an independent consulting firm – to work specifically on strategies for how this community can realistically begin to position itself to generate an additional $20MMs on a going forward basis?

Is there any reason we do not utilize these discussion opportunities – focusing around the need for additional new taxes – to begin an earnest conversation about the imperative of creating a realistic economic development strategy leading to a more sustainable and prosperous future?

If this is not an opportune time to begin having those conversations in earnest – when is?

$20 million at this point seems like a high number. Robb’s estimate was $8 (based on Leland) and parred down toward $4.5 million when other revenue was taken into account. Although that may underestimate the impact of the PERS hit.

They’re your numbers “as reported”. You don’t really expect me to believe that we should simply ignore the pension portion – which appears, by itself, to be greater than the infrastructure component? So, what did Robb actually say?

However you want to add them up, shouldn’t the conversation at least include a strategy discussion for how we climb out of that $15-$18 million hole?

If I recall correctly, a citizen initiative/referendum can be placed on the ballot to impose a tax… with a simple majority (50% +1)… I’d support a citizens’ effort to place a UUT on the ballot, covering all utilities, including water and sewer. With the goal of raising a similar amount of revenue.

The stated intent would be to make clear the intent of what the resulting revenues would or not be used for… it would be non-binding as to that (as a general tax), but any Council candidate or member who did not follow the intent would face non-election, or recall by the same people…

Any takers here? I have talked to some folk, and they like the idea, on about a 2/3 margin…

If we did so, the “hit” for a typical SF owner/occupier would likely be less than the current proposal… I continue to believe that a UUT would be more fair across user groups of parks, roads, and social services as far as putting ‘skin in the game’…

I actually think 7000 is doable… and am thinking seriously of doing the effort… you are, I think, overstating the requirement… by a factor of two (or 4)… I’ll have to drill down further, but I thought it was 5% of the Davis voters in the previous general election…

Even at 10%, there were not 70,000 Davis voters in the last general election… stay tuned…

Compared to the parcel taxes, if it’s pointed out about the equity issue, SF vs MF/non-res, it would be a major “sell”.

So, it is registered voters… I was incorrect on that… however, I’d challenge the voter roll count as part of it… as a poll worker, I’m very aware about how voter rolls are not updated when folk move out of the entity… there are folk on the roll who moved out of Davis years ago… there are duplicate registrations (folk who moved within an entity, but due to name change, etc., they are on the rolls in two places).

Given the population of Davis, and the %-age of those eligible to vote, just can’t believe there are 70,000 legitimately registered voters currently in Davis.

Damn, it’s amazing. The Vanguard runs an article yesterday saying that we shouldn’t do a tax poll and should just go for it and wham, that very night the council does just that. Is the Vangaurd clairvoyant or maybe the council is channeling the Vanguard?

Why no discussion on the UUT? If homeowners keep voting for parcel taxes there’s no end in sight, they’ll keep coming back to the trough until we say no. Don’t expect apartment tenants to help you out either, they don’t have to pay the tax.

Keith, in public comment I specifically asked the Council members to ask the City Attorney for his legal opinion about how the City will apply the tax, either by unit or by parcel. The answer was “by unit.” In that scenario the apartment tenants will definitely be paying the tax.

Not the same rate that homeowners are paying, not even close. That also assumes that the landlords will kick down the extra fee. Also, what’s to keep another lawsuit from happening like the school parcel tax litigation in which apartments were not taxed by units?

Keith O said . . . “Not the same rate that homeowners are paying, not even close.”

That is a strange comment Keith. If each SFR is paying $125 and each apartment unit is paying $125, how is that not the same rate?

Keith O said . . . “That also assumes that the landlords will kick down the extra fee.”

Do you really think landlords will not include their Property Tax costs in the calculations they do in order to establish their rental fees? With that asked, why does it matter whether the landlords do so or not? The dollar amount being paid is the meaningful metric, not who is paying those dollars.

Keith O said . . . “Also, what’s to keep another lawsuit from happening like the school parcel tax litigation in which apartments were not taxed by units?”

Absolutely nothing, but that is only speculation at this juncture. Further, having a lawsuit filed is not important. Having a lawsuit lost by the City is what would be important.

Matt, it was my understanding that the per unit charge for apartments for the school parcel tax that got litigated out was only going to be $20 per unit. Are you saying that each apartment unit will have to pay the same rate as SFR’s under this new city tax proposal?

Keith, you are mixing apples and oranges. The City and DJUSD are separate entities. What DJUSD chooses to do is independent from what the City chooses to do. What the City chooses to do is independent from what DJUSD chooses to do. Measure E was a vote for a DJUSD Tax. It is irrelevant vis-a-vis the City.

What is relevant is the structure of the City’s existing special taxes. I’ve copied and pasted the Rate Structure of the Open Space Tax. As you can see from the Market Rate row, the rate for a Single Family Residence is $24, which is exactly the same as the per unit rate for Multi-Family Residences.

I have not found a similar table for the Parks Maintenance Tax on the City website, but I will try and track it down tomorrow. I fully expect that the structure of the Parks Maintenance Tax is the same as the Open Space Tax, with Single Family Residences and Multi-Family Units paying the same rate.

Keith, with a little bit more digging I found the Parks Maintenance Tax rates. As you can see, the rate is the same for Single Family Residences and Multi-Family Residence Units … $49.00 per year per unit.

If MF pays per DU, rather than just by parcel, most of my issues go away… it is unclear whether this can be done… if MF is assessed by DU, equal or within 80% of a SF, it gets close enough to proportionality, as a UUT would. And simpler…

And no, folks, not by bedroom, unless you want the same standard applied to SF. Our SF ‘unit’ has 5 bedrooms. 2 of those are used as ‘residence’, 2 as visiting family/guest rooms, one as a common ‘home office’… 3 regular residents.

The Council discussion did touch on alternatives such as by square foot, but Brett was very clear that he did not want to use any taxation form that was not tried and true.

Does anyone know what Jose Granda’s legal argument was in the DJUSD case where he opposed DJUSD’s “by unit” method? I’ve never understood what Jose’s logic was in filing that lawsuit. It never has made any sense to me.

Thanks Jim. That helps some. The key information from the Enterprise article is as follows:

[Alameda’s] Measure H was challenged by a local businessman, and several others, who objected to the different rates charged homeowners and commercial property owners. The lawsuits — Borikas et al v. Alameda Unified School District — contended that state law requires “uniformity” in a parcel tax, i.e., a tax that will “apply uniformly to all taxpayers or all real property within the district.”

In Davis, local voters approved the school parcel tax Measure E last Nov. 6. It also charges different rates — $204 per year for single-family homes and $20 per unit per year for apartments, duplexes and other multi-unit dwellings.

Well, I hope that Matt is right, regarding the ability of the city to apply the tax via unit, instead of parcel.

On a related note, does anyone know how many parcels the Nishi proposal will consist of? (Hopefully, not “one”, with a single parcel tax applied to the entire property – if it ultimately turns out that the city cannot allocate by the unit.) 🙂

A yes vote was a vote in favor of imposing an annual parcel tax—a kind of property tax based on units of property rather than assessed value—to support local law enforcement activities. The proposed tax amounts were $400 per unit of multi-family or apartment residences, $500 per unit of all other developed parcels, $100 per unit of developed parcels for senior citizens, $50 per unit of undeveloped parcels for senior citizens, and $100 per unit of all other undeveloped parcels.

A no vote was a vote against imposing an annual parcel tax to support local law enforcement activities. The proposed tax amounts were $400 per unit of multi-family or apartment residences, $500 per unit of all other developed parcels, $100 per unit of developed parcels for senior citizens, $50 per unit of undeveloped parcels for senior citizens, and $100 per unit of all other undeveloped parcels.

As we know – it’s not just these latest taxes that are being allocated unfairly. The cumulative impact (when also considering the school district tax) is getting out of control.

What we’re starting to have is a situation in which those who don’t pay the costs (e.g., those in apartments) are able to impose costs upon those who do (those in single-family dwellings). (And, that discrepancy will grow, if/when the balance of power shifts.)

David: In the absence of actual data, your statement cannot be verified. As a side note, isn’t part of the problem that apartments are becoming increasingly student-oriented (and designed that way from the start), thereby displacing workers and families?

I don’t recall you putting forth numbers which show how many school-aged children live in apartment complexes, vs. single-family dwellings.

To analyze it, such information could be shown as hard numbers, as well as the percentage of occupancy in each housing type. (For example, XX% of apartments house school-aged children, and XX% of single-family dwellings house school-aged children.)

You might have to break that down further, to differentiate between Affordable and “regular” apartment complexes.

David… maybe not intentionally, but you dissemble… rentals require ‘adults’ to sign leases… who may be students… they may have children… there are those (renters of MF or SF) who are not students, but have students (children) in their household…

I interpret Ron’s question to include adult students who sign leases, and non-students who have signed leases, who have children in schools… (or adult students who also have school age children… not a large %-age, but a significant number… estimating 2-5%)

I may be incorrect, but that’s I parse Ron’s questions… if I am correct, you have not answered those…

“For example, XX% of apartments house school-aged children, and XX% of single-family dwellings house school-aged children.”

For that calculation, it would not matter if the adult occupants are students at UCD. Nor would it matter if they are renters, vs. owners.

Regarding the proposed parks, roads, and social services parcel taxes, I’m going to assume that those in apartment complexes are (at least) “equal” users, compared to single-family dwellers. (And yet, it appears that ALL of the cost will fall upon single-family dwellings.) (Again, not mattering whether or not they are renters.)

To clarify my last paragraph, “almost” all of the cost will fall upon single-family dwellings, vs. apartment units.

It’s difficult for me to believe that the council would even consider this tax structure, after all of the controversy regarding school district parcel taxes. Assuming that David is correct regarding these plans, it’s like the council isn’t even listening.

And again, I suspect this proposals such as Nishi will be endangered, if the council fails to adequately allocate parcel taxes and impact fees. (Perhaps even more so, in light of the elimination of the “innovation center” component which was supposed to generate revenue for the city.)

Yes Ron, if the proposed parcel taxes aren’t more evenly dispersed between homeowners and renters hopefully homeowners will finally wise up and quit footing the bill for the entire town. That’s what it’s going to take to stop this practice.

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